U.K. cuts HSBC value by 17%

HSBC Chief Executive Officer Stuart Gulliver said that the bank is undervalued by $28 billion because of U.K. financial regulations introduced after the debt crisis.

The U.K. banking levy and the Treasury’s demand that banks set aside capital to absorb a loss of as much as 20% of their balance sheets will cost HSBC $700 million and $2.1 billion, respectively, in 2012. At a price-earnings ratio of 10, that would shave about 17% off the bank’s market capitalization.

Gulliver has asked the Treasury to make the banking levy a windfall tax, which would make it tax-deductible and protect HSBC’s dividend, the Sunday Telegraph reported.